Report: Social Service Non-Profits Support $15 Min Wage with Footnotes

A new report concludes that, in the absence of new resources, a $15 minimum wage will force human service providers to cut services.

A February 11 report from the Seattle Human Services Commission concludes that—while the group "fully supports raising the minimum wage for all human services workers (and others) to $15 an hour," an immediate, across-the-board increase, in the absence of additional revenues, they say, would force human service agencies to cut services, lay off workers, and refocus their efforts to serve more independent, high-functioning populations, cutting services to those with developmental disabilities and other major challenges.

The study, which surveyed 29 coalition members (only three of which already pay all their employees at least $15 an hour), concluded that "the cost impact" to those organizations "would exceed $10.9 million and impact over 2,546 employees." The groups surveyed included the Downtown Emergency Services Center, El Centro de La Raza, the Salvation Army, and Compass Housing Alliance.

"Without additional revenue," the report continues, "service cuts are inevitable. The greatest impact would be on the most at-risk individuals in our community."

Specifically:

• 11 of the 29 organizations said it would cost them at least $100,000 to raise wages, including "one organization that provides critical mental health, shelter, day, and hygiene services as well as meals for hundreds of people in Seattle" that estimated it would cost about $1 million a year to bring all its employees up to $15 an hour and maintain its current service levels. (None of the organizations providing specific dollar figures was identified by name).

• Nine of the organizations anticipated extra costs of more than $100,000 resulting from "compression"—the fact that some employees with higher skill and experience levels who currently make around $15 an hour will need wage hikes to reflect their extra value to an agency. One organization that provides support to people with disabilities estimated it would cost about $490,000 to raise wages to deal with compression; another that works with homeless people and at-risk youth said it would need to raise 159 employees' wages to address the compression issue.

• Some groups that work both inside and outside Seattle said they would have to raise all their employees' wages to "maintain integrity within [the] organization," and because in some cases, employees work in both Seattle and outside the city. Seven organizations said they would have to spend more than $100,000 to increase pay for employees outside Seattle.

Note that the coalition isn't saying, don't raise the minimum wage to $15 an hour. They're saying, don't raise the minimum wage to $15 an hour without figuring out a way to get more resources in the hands of nonprofits.• Finally, and most damningly for the no-exceptions $15 crowd, the report concludes that a minimum wage upgrade without additional funding for human services will "force many organizations to cut services, as that would be the only remaining factor in this equation they could control."

That could mean, according to the groups responding to the survey, things like cuts to shelter beds for the mentally ill; the elimination of meal service for disabled formerly homeless individuals; the elimination of winter shelter beds; cuts to early learning programs—among many other service cuts.

Note that the coalition isn't saying, don't raise the minimum wage to $15 an hour. They're saying, don't raise the minimum wage to $15 an hour without figuring out a way to get more resources in the hands of nonprofits that, without additional funding, will be forced to make some tough choices about how many, and who, they can serve.

"Income inequality and stagnant wages on the lower end of the wage ladder are a major factor in unmet basic human needs," the report concludes. "SHSC members support many approaches to help people meet their basic human needs, including raising the minimum wage closer to a living wage. At the same time the method of implementing these solutions must be done in a thoughtful manner to prevent unintended consequences such as denying access to critical services to vulnerable, low-income people."

Ultimately, of course (as the report acknowledges), a higher minimum wage is beneficial for all lower-wage workers, including both those who work in human services. And when clients of human services agencies make more money, they're less likely to need those services, reducing the agencies' caseloads and cutting their costs.

El Centro de la Raza director Estela Ortega, who preemptively raised all her workers' salaries to $15 an hour, tells PubliCola that higher wages give workers a reason to stay at their jobs and the ability to spend more money, putting more tax dollars into the economy.

"We know how expensive Seattle is," Ortega says. "It felt like the right thing to do."

Mayor Ed Murray's 25-member minimum wage panel is expecting to get the results of studies from UC Berkeley and the UW on the potential impact a higher minimum wage could have on businsesses by the end of March; Murray has told the panel to come up with a proposal to raise the minimum (though not necessarily to $15, and not necessarily for all businesses) by the end of April.